Philanthropy Fault Lines
April 15, 2020 | Perspectives | Equitable Recovery

Woods Fund Chicago President Michelle Morales and MacArthur President John Palfrey address some of the challenges they are facing as their foundations respond to COVID-19. In this conversation they discuss the racial and ethnic disparities that have been exacerbated by the pandemic, the trade-offs foundations make when quickly getting money out the door, whether moments of crisis provide clarity about long-term grantmaking, and the promise of philanthropy in this moment.


Exposing Historic Inequities ›
Acting Quickly to Deploy Resources ›
Making Cuts Without Undermining Effectiveness ›
Supporting Grantees and Removing Barriers ›
Creating a New Normal ›



Exposing Historic Inequities


Thank you, Michelle, for making time to exchange views with me in this format. You and I started in our respective roles as president within the last year; we have both been called upon to pivot from onboarding to leading in a crisis. I am curious to learn more about how you are thinking about the Woods Fund’s approach and role during the COVID-19 pandemic. Where do you see the greatest need today among the communities you serve and how you are seeking to meet that need?



Yes, what a time for rapid learning. As we all are aware, this pandemic has exposed every inequity that community organizations have worked to confront: systemic health disparities, infrastructure disparities, economic disparities, educational disparities...the list goes on. In essence, Chicago's organizers have been raising the alarm for decades—warning that these entrenched inequities will come to roost. Woods Fund is one of the few foundations in Chicago that funds community organizing and public policy advocacy. Our role has always been to support organizing efforts in the city, to amplify the issues our grantee partners are advocating for, and to center racial equity in all that we do. This pandemic is causing us to amplify that role. Many of our grantee partners had to pivot to provide direct services to their constituency and to quickly figure out how to organize virtually, when they do not have the infrastructure to work from home. Obviously the need is overwhelming. The communities that our grantee partners serve are vulnerable and are dealing with the worst of this pandemic. 

Meanwhile, we are trying to figure out how to keep our grantmaking intact while offering our smaller grantees additional general operating and technical support to apply for the CARES Act. You know, before I made the switch to philanthropy, I was the biggest critic of foundations and philanthropic practices. I kind of still am, but now I understand why foundations are not nimble. We want to make the right choices about how we support our grantees, and we want to take direction from them, both of which are the right things to do. But, I still want us to move faster. During this pandemic, it has taken us four weeks to make decisions and change our grantmaking practices. That is too long. We have learned some lessons during this crisis—about internal inefficiencies and a certain level of rigidity in our decision making—things we want to change moving forward. 

What about you, John? What do you think is the promise of philanthropy in this moment? Are there any tensions you are holding between providing rapid response funding and long-term general operating funds/patient capital?

Acting Quickly to Deploy Resources


As you suggest, I think the promise of philanthropy right now is that we can act quickly, mobilize resources, and address matters that are not getting the support and attention they deserve. For instance, where we see racism affecting our Asian and Asian-American neighbors as part of the COVID-19 crisis, we can and should call out that harm and support those working to address it. When the data show that 72 percent of deaths in Chicago are African-Americans, who represent about 30 percent of the city’s population, our grantmaking needs to address those health disparities. We can and should pivot and provide resources to the communities that are bearing the disproportionate brunt of the harm. Government or others can do that, but too often they don’t. Philanthropy does not have to work through a legislative process to get our funds and other forms of support into the hands of individuals doing the day-to-day work. And we can leverage the support of other generous donors and foundations by working together and inspiring one another to do more.
"I think the promise of philanthropy right now is that we can act quickly, mobilize resources, and address matters that are not getting the support and attention they deserve." — John Palfrey

You raise an important point about the speed with which we are deploying—or should deploy—the resources we have. At the MacArthur Foundation, we have supported causes outside of our traditional grantmaking to help the communities in our hometown, Chicago, make it through this crisis. That includes money for food, shelter, and other basic human services. We are also supporting small arts organizations and journalism and media outlets, areas where we have traditionally made enduring commitments. Our country offices in India, Mexico, and Nigeria, are weighing how to respond to COVID-19. MacArthur has long matched staff, director, and retiree charitable contributions 3:1. For COVID-19 crisis-related giving, we have increased the match to 5:1, so our team members can directly respond to the crisis in our global communities. At the same time, we are maintaining our planned grantmaking for 2020 without cutting budgets. We will have to look hard at the later years when we know what’s happened to our endowment in a few months. For now, we see our job as getting money out the door to people and organizations who need it most.

You and I have compared notes about making cuts to our administrative budgets before cutting our grants budgets. I am curious to hear your thoughts on what you are doing at Woods Fund right now on that front.



I am impressed with how quickly your foundation was able to respond. And I am in complete agreement regarding the role philanthropy should be playing during this crisis. For many of us who have been entrenched in dismantling systemic racism, the data depicting which communities are being disproportionately impacted during this crisis is no surprise. Seeing the numbers in "real time", however, is disheartening. I cannot help but think that much of this could have been avoided, if we worked collectively to build a city that works for everyone—not just the haves. Some folks might call me a dreamer for thinking this way, but the vision keeps me going. I hope this crisis is painting the picture for everyone (not just the select few who have been working toward a liberated future) of the deadly nature of these systemic inequities and disparities. I hope we never return to "normal," and that we collectively create a new normal for Chicago, that always keeps racial justice front and center.  

Making Cuts Without Undermining Effectiveness


On to operational cuts. Yes, we made the decision to cut our operational costs by $160,000—which is a lot for our small foundation. We wanted to ensure that as much of our payout was actually going towards grantmaking. This means that the team will not attend any conferences for the remainder of this year. We will freeze our hiring process (we are actually short by two full time staff members, so this was not a decision we made lightly), and we will not create and distribute an annual report. I'm actually very proud of the Woods Fund team. When I presented the idea of operational cuts, I received no pushback. The team nodded their heads and said, "it's the right thing to do."  I'm so lucky to work with a team that puts our grantee partners first. 

But while we are making these cuts this year, it is not a practice that we can maintain. We need to make an investment in our organizational infrastructure that will allow us to be more efficient and nimble. So, I'm also balancing the operational needs that we will have in 2021 with budget scenario planning.  

John, I would like to hear your thoughts regarding operational cuts and how you are thinking about your budget for the next fiscal year. 



I am so glad to learn what you are doing, Michelle, and will share these ideas with the MacArthur team, so we can learn from your good example.

As to operational cuts at MacArthur Foundation, we are taking a very hard look at everything we can reduce without undermining our core effectiveness. Of course, no one has clear visibility in terms of the mid- or long-term impact of COVID-19, but it is safe to say that we should emphasize getting money out the door in grants today and de-emphasize other types of expenditures where possible, especially during these tough times. I am hopeful that we will be able to realize savings in the millions of dollars this year from reduced travel by staff and consultants, pulling back on planned administrative improvements that are not essential, and limiting our hiring to the replacement of existing positions. This flexibility should allow us to keep supporting relief efforts at generous levels.

I appreciate your raising the prospects for the coming years. We will no doubt try to figure out how to save on the administrative side in 2021 as well; perhaps we can learn to do with less through this crisis, especially when it comes to travel and convenings. But being realistic about the value of our endowment, we have begun an exercise with multiple scenarios for the economic impact of COVID-19 on our investment returns. I have told our program staff that cuts are likely to grant budgets in out years, given that we have been operating at a peak spending level thanks to the once-soaring equity markets. The obvious big question we grapple with has to do with perpetuity and spending over time. Even if one takes the view that we need to put out more, not less, money in a time of crisis (as I do), we need to be cognizant of the fact that there will be hard times in the coming years as well, and we want to be in a position to help then, too.

Supporting Grantees and Removing Barriers


Pivoting to how you are interacting with your grantees in this time, what are the trade-offs you make in real-time when making rapid response grants?  Are you thinking differently today about your processes, such as invitation-only grants vs. open call applications?



We have been communicating with our grantees via emails, phone calls, and text messages. We know they are incredibly busy during this crisis, and so we are identifying ways we can connect without bombarding them with a ton of emails. We want to understand their needs, while also being mindful that other well-intentioned funders are likely reaching out to them too. This is the sort of thing that keeps me up at night. I'm sure there are better ways (maybe even more coordinated ways) of communicating with grantees. 

"I hope we never return to "normal," and that we collectively create a new normal for our Chicago, that always keeps racial justice front and center."
— Michelle Morales

To be truthful, I have been struggling with what the "right" grantmaking process should be during this pandemic. We are only targeting support toward our current grantees. I wonder if that is the right decision. We usually do an open call for applications, and I would like us to amplify that approach by providing additional technical assistance. As part of our upcoming strategic planning, we are going to reimagine our application process. I am inspired by the Conant Family Foundation, Kaplan Family Foundation, A Better Chicago, and Chicago Beyond, to name a few, that have decreased application barriers by allowing organizations to submit videos, an e-mail, narratives over the phone, and/or accepted proposals submitted to other foundations. I plan to reach out to each of them to learn more. Knowing that they have done it gives me the confidence that we can as well. 
What trade-offs have you made? And I would love to hear your thoughts regarding emergency funding during the pandemic vs. long-term strategic grantmaking. 



So many things to reply to. These thoughts (and problems) sound incredibly familiar. Like you, I have spent much more time as the head of a nonprofit, seeking funds, than on this side of the table as a grantmaker. I think a lot about how we can reduce barriers for our grantees and create a more genuine partnership, all the while noting the power structure that remains in place, to some degree, no matter what we do.

I think about the street outreach workers who are serving double duty as community health workers. They are using their social capital to distribute informational flyers about COVID-19 that dispel myths about the virus and encouraging people to stay at home. They are just as essential as nurses, grocery store clerks, bus drivers, and senior caretakers, who cannot afford to shelter in place and practice social distancing.

The trade-offs question is the right one. For me, the hard threshold question is how much to do now, in the moment of dire need for many of our community members and grantees who have been called on to do more, and how much to set aside for later in the year or early next year. We cannot give as much as the government or even as much as the corporate world, but we can act quickly and with a lens of racial justice, while keeping in mind existing and historical inequities. 

Think about how much more we know today about the rapidly evolving coronavirus than we did even a few weeks ago. I want us to be able to make grants that are responsive through the crisis and also to address the mid- and long-term issues that will fall out of this crisis.


Creating a New Normal


Maybe as a way to bring our public discussion to a close, might you reflect upon what you think the enduring lessons of this crisis might be? Is there anything that is really sticking with you already about this time of extraordinary global challenge? 



Great points, John. Truly appreciate your commitment to racial justice. I agree—we too are considering what the trade-offs are between focusing a lot of energy and resources to the "now" and setting aside resources for the "later". The amount of information flowing is overwhelming and the news regarding the pandemic seems to change on a daily basis. There are some things, however, that have remained unchanged for far too long. We know that communities of color will be impacted disproportionately in comparison to white communities. We know that African-American communities will be impacted even more because of historical systemic disparities. We know that whatever services or expansions will be deployed by the federal, state, or city government will have inequities embedded within them.   

The enduring lesson of this crisis is that we can no longer ignore these issues as a country, and if this country willingly continues to do so then it is sending a very strong message that it does not care about communities of color. We already know that the United States has a strong track record of perpetuating racist, systemic inequities, but this pandemic presents an opportunity to change that—to change past mindsets, past practices, and past policies. We cannot return to normal after this pandemic. All of us have to work towards creating a new normal, a new way of operating, and a reimagined future for Chicago and the world. 

Thank you so much for engaging in this dialogue with me. I have learned so much and cannot wait to continue our partnership.

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